Our latest monthly investment update for April 2024 examines how the global investment markets, economy, and commodities perform.
The FTSE 100 index of leading UK company shares closed at the end of March at 7,931.98 points, up 301 points or 3.96% during the month.
Quarterly Market Recap
The UK’s leading stock indexes finished the March quarter on a high note despite the country facing a mild recession in 2023.
The premier FTSE 100 index increased by 0.3%, and the mid-tier FTSE 250 index grew by 0.4%, reaching highs not seen in over a year earlier in the day.
The FTSE 100 experienced its most successful month since November 2022, ending the quarter with a 3% gain, marking its best performance since December 2022, though it still trailed behind its European counterparts.
Global Market Surge
Global stock markets have seen their strongest start in five years, fuelled by excitement over the artificial intelligence (AI) surge. The MSCI world index is up nearly 8% since January, the best first quarter since 2019. This boost comes particularly from the US’s S&P 500, which climbed 11% to new highs.
The surge is largely thanks to heavy investment in major US tech stocks, driven by the AI craze. Notably, Nvidia, a key player in AI technology, has seen its shares jump 88%, reaching a market value of nearly $2.3 trillion.
This tech boom is supported by impressive financial performances from Silicon Valley leaders like Meta, which recently announced a $50 billion return to shareholders following record revenue and profit growth.
The positive trend has extended beyond tech, with companies like General Electric, Walt Disney, and Eli Lilly all posting over 35% gains in the first three months of the year.
Gas and Electricity Rates
Ofgem’s new quarterly price cap is now in effect, impacting 29 million households across England, Wales, and Scotland, with Northern Ireland having its own pricing system. This cap limits the price suppliers can charge per unit of gas and electricity, meaning higher consumption will lead to higher bills. In detail:
-Gas is capped at 6p per kWh, and electricity at 24p per kWh, a decrease from previous rates of 7.42p for gas and 28.62p for electricity.
-Prepayment meter customers will see slightly lower charges, with an average bill of £1,643.
-Customers paying quarterly by cash or cheque will face higher costs, with an average bill of £1,796.
-Standing charges, which are fixed daily fees for supply connections, have increased to 60p a day for electricity and 31p a day for gas, though rates may vary regionally.
This adjustment has lowered energy prices since the significant geopolitical event in February 2022. Yet, bills remain substantially higher than before the pandemic, and some governmental financial aid has ceased.
Yellen’s Concerns
The US Treasury Secretary has criticised China for creating unfair market conditions that disrupt global pricing through its enhanced production of clean energy technologies.
Janet Yellen highlighted how China’s surge in manufacturing solar energy, electric vehicles, and lithium-ion batteries adversely affects American companies and their workers and impacts the global workforce.
Yellen, preparing for her second visit to China in her current role, intends to discuss how China’s green energy expansion could potentially harm its own economic productivity and growth. She plans to urge Chinese officials to address these issues during a speech in Georgia.
China leads in the electric vehicle battery market and has a rapidly growing automotive sector, with a significant portion of EVs in the EU market this year expected to originate from China, as per Transport & Environment (T&E) analysis.
Asian Market Trends
Chinese stocks led gains across most Asian markets on Monday, buoyed by a positive global economic outlook. However, Japanese stocks fell as the yen stayed near levels, prompting concerns about potential currency intervention.
US stock futures also rose, encouraged by the Federal Reserve’s data release during a Friday market holiday, which showed easing inflation pressures and increased expectations for a June interest rate reduction.
The anticipation of more lenient US monetary policy pushed gold to new highs, while crude oil prices remained steady due to a tighter supply-demand balance, improved economic conditions in China, and anticipated OPEC+ production cuts.
By 0600 GMT, mainland Chinese blue chips were up 1.39%, leading gains in the region after a private survey and official data indicated that China’s manufacturing activity grew at its quickest pace in 13 months in March, marking the first expansion in six months.
Potential Rouble Pressure
At its March meeting, Russia’s central bank focused solely on maintaining the key interest rate at 16%, attributing this decision to a more modest decrease in inflation pressure compared to the end of 2023.
The central bank’s meeting minutes revealed concerns that a premature rate cut could trigger a new inflation surge, potentially more challenging to manage. Therefore, it suggested that controlling inflation might necessitate further real interest rate increases.
Russia’s primary stock index reached its highest level since its military intervention in Ukraine in February 2022, with the rouble also strengthening slightly against the US dollar.
By 1025 GMT, the rouble-based MOEX Russian index had risen by 0.9% to 3,361.5 points, and the dollar-denominated RTS index increased by 0.9% to 1,147.5 points. Meanwhile, the rouble improved by 0.2% to 92.29 against the dollar.
However, Yevgeny Loktyukhov from Promsvyazbank cautioned that the rouble might face weakening pressures soon due to the end of a favourable tax period and potential increased demand for dollars and euros in the US and Europe after the Easter holiday.
The personal consumption expenditures (PCE) index in the US, closely monitored for inflation insights, saw a release during a period when most markets were closed, offering the first substantial opportunity for analysis now.
Fed’s Inflation Gauge
In February, the PCE index experienced a year-on-year increase of 2.5%, a slight uptick from 2.4% in the previous month. More notably, the core PCE index, which excludes the fluctuating costs of food and energy and is preferred by the Federal Reserve for assessing inflation, rose by 0.3% month-over-month.
This increase was somewhat unexpected, especially after Federal Reserve Chair Jerome Powell indicated last week that core inflation for February would be “well below” 0.3%.
Buyer Interest Boost
March witnessed a surge in buyer interest and robust house sales, pushing the average UK house price up by £5,279 to nearly £370,000, signalling a market revival after a subdued 2023.
Rightmove reports that this month’s 1.5% price increase surpasses the usual 1% March rise, marking the most significant monthly growth in ten months. Estate agents have observed a marked rise in buyer demand, with many people identifying a favourable buying opportunity.
The current average asking price in the UK is £368,118, showing a notable rise but still remaining £4,776 below the peak of May 2023, as the market continues to recover from the previous year’s lull.
Market Data
£1 buys $1.26081 or €1.16951. Gold is $2214.35 an ounce, and UK natural gas futures are 68.16p/therm, up from 62.71p/therm at the start of March. The UK 10-year gilt yield is 3.941%, down from 4.247% at the start of March.
